2001: How did Buffett get comfortable enough with USG's asbestos exposure to invest?
AUDIENCE MEMBER: Good morning. My name is Ken Goldberg from Sharon, Massachusetts.
A few questions ago, you mentioned the company’s investment in USG. I was wondering how the company — how you got comfortable with that as an investment, in light of the asbestos exposure?
Do you view the company — the stock — as cheap enough and the asbestos exposure as manageable enough over time, so that the investment is justified?
Or do you view it as, in a worst-case scenario, if the subsidiary with asbestos exposure blows up, the rest of the solid businesses are insulated from that and are alone worth the price of the investment?
CHARLIE MUNGER: Let me answer that. I don’t think we want to comment. (Buffett laughs)
WARREN BUFFETT: Yeah. It’s one-tenth of one percent of Berkshire, roughly. I mean, but as Charlie says, that gets too close to giving stock advice.
But I will tell you their asbestos problems are serious, and they would be the first to tell you that.